NRC: Exelon execs hid $1 billion shortfall

A Nuclear Regulatory Commission investigation has concluded Exelon Nuclear provided NRC with inaccurate information about how much money will be available to de-commission the company’s power plants at the end of their lives, potentially hiding a shortfall of “roughly $1 billion.”

In a Jan. 31 letter to Michael Pacilio, president and chief nuclear officer of Exelon Nuclear, the NRC wrote that its “investigation did substantiate that a senior Exelon executive and an Exelon manager appear to have deliberately provided incomplete and inaccurate information to the NRC” regarding de-commissioning funds at 23 nuclear reactors at all 12 plants in the Exelon nuclear fleet, including the Limerick Generating Station.

In addition to Limerick, shortfalls were also identified at two other Pennsylvania plants — Peach Bottom and Three Mile Island — and two New Jersey power plants — Salem and Oyster Creek — as well as seven nuclear plants in Illinois.

Exelon disputes the NRC’s findings, according to a spokesman.

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Every two years, the NRC requires nuclear power plant operators to provide an update on the de-commissioning funds they are required to have available when power plants are closed down.

Most are trust funds that are invested and expected to grow at a rate adequate enough to provide the appropriate amount when the time comes to decommission a plant.

“These funds cover all costs associated with returning a nuclear site to pre-facility conditions and fund balances are tracked and reported using a complex and highly technical formula,” David Tillman, Exelon’s senior manager for nuclear communications in Kennett Square, wrote in response to questions posed by The Mercury.

“We review those filings to ensure the funds are growing at an appropriate rate so that there will be adequate funding when the time comes to dismantle the plant,” added NRC spokesman Neil Sheehan, who was also responding to questions e-mailed by The Mercury.

There is an NRC-accepted formula for making those calculations.

“The total cost of decommissioning a reactor facility depends on many factors, including the timing and sequence of the various stages of the program, type of reactor or facility, location of the facility, radioactive waste burial costs, and plans for spent fuel storage. The NRC estimates costs for decommissioning a nuclear power plant range from $280 million to $612 million,” according to information on the NRC website.

Currently, the operating license for Limerick’s Unit 1 expires in 2024 and in 2029 for Unit 2.

However, the NRC is currently considering Exelon’s request to extend those operating licenses another 20 years, meaning the funding of Unit 1’s decommissioning might not become an issue until 2044.

According to the Jan. 31 NRC letter, provided to The Mercury, the amounts available for the Limerick Generating Station de-commissioning fund were below the NRC minimum in the 2005, 2007 and 2009 reports submitted to the NRC.

In March of that year, “Exelon stated that several of its sites did not meet the NRC’s minimum funding requirements, but it did not quantify the shortfalls,” Sheehan wrote.

“Because NRC staff members responsible for this area were concerned with these shortfalls, they independently calculated the funds required under the NRC formula,” Sheehan wrote. “The staff’s initial evaluation concluded that eight of Exelon’s plants had an aggregate shortfall of roughly $1 billion.”

The staff then looked back over previous reports from 2005 and 2007 and “determined the amounts reported” in those years “were less than the formula amount required,” he wrote.

NRC’s Office of Investigations initiated its investigation on Sept. 10, 2010, and reviewed reports from 2001 to 2009.

According to the Jan. 31 letter, the NRC concluded that “based upon the evidence developed, the investigation did substantiate that a senior Exelon executive and an Exelon manager appear to have deliberately provided incomplete and inaccurate information to the NRC in Exelon’s 2005, 2006, 2007, and 2009 DFS reports. These actions appear to have placed Exelon in violation of” NRC rules.

Sheehan said under the law, NRC cannot release the names of that executive and manager, but he did say they work in Exelon’s corporate offices in Chicago.

“I can tell you it was the director of spent fuel and decommissioning and the manager of spent fuel and decommissioning,” Sheehan wrote.

Attempts to confirm the identity of those officers Friday were unsuccessful.

Tillman responded to The Mercury’s inquiries about the NRC’s investigation by writing that Exelon disputes the NRC’s findings.

“While Exelon Generation disputes the NRC’s findings, we will continue to aggressively investigate this issue internally,” Tillman wrote. “We are not aware of any evidence supporting a conclusion that Exelon employees performed or condoned deliberate misconduct or intentionally violated regulatory requirements.”

Noting that “Exelon cooperated fully during the investigation,” Tillman added that “Exelon acted in good faith when providing decommissioning funding date to the NRC, reporting timely and accurate information based on our understanding of the regulations.”

He pointed out that “for each year of the reports at issue, the NRC reviewed the information provided by Exelon and either had no issue or made additional requests with which Exelon complied.”

Tillman emphasized “at no time was Exelon unable to meets its decommissioning funding requirements.”

Asked if NRC has ever taken this action before, Sheehan wrote that “we have not, to date, taken enforcement action over decommissioning trust fund updates.”

According to the Jan. 31 letter, the “apparent violations of NRC requirements” found in the investigation “are being considered for escalated enforcement action.”

However, before that happens “we request Exelon’s participation in a pre-decisional enforcement conference,” Ho K. Nieh, director of NRC’s division of inspection and regional support, wrote in the letter.

This conference, which will be closed to the public, “will afford Exelon the opportunity to provide its perspective on the apparent violation and any other information that Exelon believes the NRC should take into consideration before making an enforcement decision,” according to the letter.